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New Image half-year revenue slips

Wednesday 9th February 2011

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Colostrum product direct selling company New Image Group reported lower half year revenue, partly due to retail level discounting in Malaysia.

For the six months to the end of December, New Image had revenue of $37.3 million, down from $40.1 million a year earlier, while earnings before interest, tax, depreciation and amortisation fell to $4.8 million from $5.7 million.

Among reasons for the decline in revenue was discounting at the retail level of its lead product, Alpha Lipid Lifeline, in Malaysia, New Image said.

The popularity of the product saw it sold into retail by large direct sellers within Malaysia, affecting the morale of smaller direct sellers, who could not compete and had stopped selling. That issue was being addressed and had resulted in an upturn of sales in January.

A second reason related to the redirected focus of key distributors in Malaysia, who were helping New Image's expansion into new country markets.

Half-year revenues from Malaysia fell to $12.6 million from $18.3 million a year earlier, while sales in Taiwan rose to $16.3 million from $15.4 million.

During the half year, the company carried out a $1.5 million upgrade of its Auckland production and distribution facilities to cater for increasing volumes of contract work and an opportunity to enter the infant formula market in East Asia, New Image said.

The development of a second generation of skin care products for the company's direct selling channel was being accelerated by the purchase of an interest in natural skin care company Living Nature, with the shareholding to go to 50.1% after March.

The acquisition of intellectual property and patents for a sleep enhancing milk peptide product from biotechnology company Somnaceutics, following a trial in Taiwan, was part of accelerating New Image's development of natural products that were scientifically based and clinically proven.

New Image shares last traded at 25c on Monday, having ranged between 24c and 46c in the past year.



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